deficit

The Congressional Budget Office just released a new report, The Budget and Economic Outlook: 2015 to 2025 Report (January 26, 2015). In an article at the New York Times titled "Budget Forecast Sees End to Sharp Deficit Declines", they referenced the report, and then quotes Senator Michael B. Enzi (R-Wyoming), the new chairman of the Senate Budget Committee: “The past will catch up to us no matter how fast we run from it."

The destruction from Hurricane Sandy will negatively impact fourth quarter economic growth. Most of us have heard by now that not addressing the fiscal cliff will throw the United States back into recession. The CBO has warned and warned again. Similar to the trifecta of three separate weather events combining to create Frankenstorm, we have economic and political events colliding to do the same.

With Spain now getting a bail out all to pump up their insolvent banks, one might wonder how did we get here in the first place?

We actually are on the precipice, with a key critical Geek vote on whether or not they will default on their international bail out. Sitting on the edge of a cliff, a review of the European sovereign debt crisis and how we got here is at hand.

What the hell happened is complicated. Greece is not the same as Ireland, nor is Spain the same as Greece. Ireland's sovereign debt crisis was the direct result of their financial crisis. Greece, on the other hand, had long standing structural problems with their economy. Nor are their economies the same although treating them as such originally was part of the problem.

The St. Louis Federal Reserve Research Director Christopher Waller gave a presentation on the the European Debt Crisis. The entire May 8th, 2012 lecture is below. The focus is on debt to GDP ratios, the European Union and interest rates for sovereign bonds. We learn about the European Union's major financial structural problems versus how exactly the debt happened. There are plenty of specifics and this lecture is concise, accurate in it's scope. If you don't understand European Sovereign Debt fundamentals, watch this lecture in full and you will.

The CBO has issued a new report on what all of those automatic budget cuts are gonna do in 2013. They will cause a recession.

Growth in real (inflation-adjusted) GDP in calendar year 2013 will be just 0.5 percent, CBO expects—with the economy projected to contract at an annual rate of 1.3 percent in the first half of the year and expand at an annual rate of 2.3 percent in the second half. Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession.

What the CBO is referring to is the fiscal cliff. Remember when the budget crisis happened, resulting in the United States losing it's AAA credit rating? Then, Congress and this administration just punted, didn't compromise, or better yet, base recommendations on actual economic theory, and allowed automatic spending cuts of $1.2 trillion across the board, to take place instead. These budget cuts will be dramatic and happen in 2012 and 2013.

Originally published by OpEdNews.comby Paul Craig Roberts
Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security.

If the rating agencies downgraded Treasuries, the company executives would be arrested for the fraudulent ratings that they gave to the junk that Wall Street peddled to the rest of the world. The companies would be destroyed and their ratings discredited. The US government will never default on its bonds, because the bonds, unlike those of Greece, Spain, and Ireland, are payable in its own currency. Regardless of whether the debt ceiling is raised, the Federal Reserve will continue to purchase the Treasury's debt. If Goldman Sachs is too big to fail, then so is the US government.

Michael Collins
We are in the midst of a bum's rush - the quick eviction of a less than desirable in an unpleasantly abrupt fashion. The problem is we're the bums. Our eviction from the political process is all based the word of a firm that helped fuel the housing bubble, trigger the financial collapse, and found itself indicted by the State of Connecticut for "unfair, deceptive, and illegal business practices" in 2008.

The most mean spirited and absurd budget came out today while the Republicans are threatening to shut down the government. Yes, we know politicians, both parties, are all bought and paid for, corrupt as hell, but a government shut down? This affects real people and the real economy, not just federal workers but all of the Americans who rely on them. All federal workers except emergency services go unpaid, but guess who still collects their paycheck? Why the ones who caused it, our President and our lovely Congress.